Amazon.com has revolutionized everything from publishing to online shopping. But can it save retail banking?
The Internet giant was the virtual guest of honor this month at Retail Banking 2014, an American Banker conference. On stage and in interviews, top bank executives repeatedly invoked Amazon's name as an example of what they aspire to become.
"Amazon was conceived around the use of data and the customer experience. Banks have not grown up that way," Catherine Bessant, the global head of technology and operations for Bank of America (BAC), said in an interview, calling the ecommerce company "the most visible example of using data to customize a customer experience."
Bessant was one of many bankers to cite what SunTrust (STI) senior executive Rilla Delorier called "the Amazon model" as a possible savior for the industry. Banks are slowly improving the technology they offer, but they are still struggling to figure out how best to use the massive amounts of data that they have on their customers. Meanwhile, competition is fierce, low interest rates are squeezing the profits they can make from those customers, and most banks don't know how to get more business from people who, after all, only need a limited number of checking accounts or mortgages.
"Amazon's not calling you to say, 'Do you want something?' They're presenting it in a way online, they're using the data to understand what people want," Delorier, who oversees SunTrust's consumer banking strategy, said in an interview.
"For banks it's new, so it's hard to take the leap of faith to invest in a big piece of technology or a big piece of data and integrate systems," she says. "The biggest piece of work ahead of us is how do we take what we know about the client .. and use that to inform the interaction."
Manolo Sanchez, the chief executive of BBVA Compass, also brought up Jeff Bezos' online behemoth in a discussion of how banks could improve their use of data and technology.
There is "a concept that's common in Internet retail, which is 'propensity to buy' and the algorithms that come with that. I think we are at the infancy of understanding those business models in banks," Sanchez said in an interview. "And that's what Amazon and all the internet retailers were founded on. They can tell you what you need to buy next."